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????----hhhhhhhhhhhhhhhhhhhhhhhh the worst flu season in decades is having ill-effects on the business world. in today's cover story, mortgage rates are on the rise. how it's framing the overall picture of the economy. plus, will the newly nominated treasury secretary be a friend or foe to wall street? why amazon might be preparing for its 15 minutes of fame with traders. and "new money" is creeping into the market. first business starts now.
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you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's friday, january 11th. i'm angela miles. in today's first look: it's an s&p 500 hundred party! the s&p closed at a 5-year high yesterday. financial stocks were among the leaders. just as wall street is making gains, american express is sliming down. the company revealed it's cutting 5,400 jobs. the stock edged up 1% on the news after the close. and vice president joe biden says he will have recommendations on curbing gun violence by tuesday. john brady of rjo'brien joins us now for a closer look at the market. this could get interesting today. the s&p 500 crossing 1470. what does that mean to traders? > > i think from a technical perspective it's suggests the market is strong. we are heading into earnings season, where earnings season expectations are rather modest given so much concern about the fiscal cliff last quarter. so, technically the market looks pretty strong. now the hope is, of course, that the weekend press cycle doesn't shift the subject perhaps back to the debt ceiling debate. so early on in trade today, we will see more
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follow-through from the strong wednesday-thursday trade, but perhaps expect a little bit of profit-taking in the last hour ahead of the weekend press cycle. > > what are you seeing as far as volume, and did growth in china have anything to do with this latest rally? > > right, no, absolutely. first and foremost, china. the chinese trade data from wednesday night into thursday morning was exceptionally strong, exceeding analysts' expectations by 50%. it suggests or gives the hint that perhaps the global and domestic economies are both a little bit stronger than what some of the data is perhaps suggesting. that would be welcome news for federal reserve policymakers. your second point, volumes - volumes have been very strong at the start of the new year. even the s&p futures for example, yesterday traded over 1.6 million contracts in its heaviest volume day of the year, so, volumes are strong, and there is a lot of new money entering the market - 401(k)s, pension plans, whatever else - so look for volumes to remain elevated. > john, you enjoy your trading day. have a good one. > > thanks much. you too. the average rate on 30-year fixed mortages rose to 3.4% -
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that's the highest its been in two months, a sign that employment is improving. and as our cover story explains, it coincides with new rules for lenders on how they decide who gains approval and for how much? mortage rates ticked up slightly, from 3.31% in november, the lowest in more than 40 years, to 3.34% last week and now, 3.4% - still pretty low. "interest rates are extremely low, home values are good. it's worthwhile to go through the process." and to prevent a repeat of the free-wheeling days of interest- only and no-documentation loans before the housing bubble burst, the newly created consumer financial protection bureau set new rules for lenders. "since the downturn in the economy, lenders aren't accepting state's loans. this just makes official what's already in practice." borrowers will have to prove that they'll be able to repay their loans. "it's not going to be simple. not that it's been that easy because of tight credit." beginning in 2014, a lot of
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loans will hinge on whether your debt is higher than 43% of your income. if it is, you may not get the loan. "i think it's reasonable. for fha loans, there's a range. 43% is very comfortable. i think it's realistic." the new standards are part of the 2010 dodd-frank act. they hope to avert another collapse of the housing sector. in exchange for more selectivity, lenders may face fewer penalties if the loans fall into foreclosure. not the wild west, but not a strait-jacket, either. "the 'wild west' is done. this is about rational lending." however, the national consumer law center says applying a 43% debt-to-income ratio to someone making just a thousand dollars a month still invites abuse, yet now gives lenders "cover" from legal action. starbucks is attempting to block actor patrick dempsey's bid to buy tully's coffee in
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court today. dempsey's group, global baristas, offered $9 billion for the tully's franchise. now starbucks and agri-nurture, a food producer based in the phillippines, are offering to buy all 47 tully's locations in a $10.5-billion bid. starbucks wants 25 of those stores to rebranded under its own name. the case heads to bankruptcy court today. herbalife's ceo is fighting back. ceo michael johnson defended the nutritional supplements company after hedge fund manager bill ackman called it a "pyramid scheme" with shady business practices. johnson says herbalife is a legitimate company with real products, customers, and solid management. ackman bet one billion dollars against herbalife's stock, and called for the ftc to shut it down. herbalife shares were down 70% at $39 thursday. the nomination process for the next treasury secretary is moving forward with president obama naming jack lew as his
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pick. "i trust his judgement, i value his friendship, i know very few people who have greater integrity than the man to my left." lew currently serves as the chief of staff in the obama administration and could become treasury secretary when timothy geithner leaves later this month. joining us now via skype with insights is jim bianco of bianco research. how is wall street responding? > > lukewarm on the jack lew nomination. they're not really that thrilled. > other than lew's poor penmanship, how well will lew's no-drama approach play out in the upcoming debt ceiling talks? > > in the debt ceiling talks it is going to be interesting. other than the no drama, he has got a history of being confrontational with republicans, and that is going to be difficult because that is who he's got to deal with. > didn't he once work on wall street? > > briefly at citibank for a couple of years around the time of the financial crisis. > do you think the republicans
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will go along with his nomination? > > i think at the end of the day he will probably get the nomination, but it won't be without a lot of skepticism and a lot of thought about whether or not they could have found a better person. > jim bianco, good to talk to you today. > > thank you. google's executive chairman ended his trip to north korea by endorsing the internet. eric schmidt told reporters this week that the country risks falling out of touch because of heavy internet regulations. the google exec stirred up controversy earlier this week when he flew to the eastern country in spite of criticism from the state department. north korea's citizens are obstructed from accessing the internet. foreign media is also widely illegal. schmidt says the country faces falling behind economically due to the restrictions. a fast food chain owner is apologizing to consumers in china about a recent tainted- chicken scare. yum brands, which owns kfc, pizza hut and taco bell, generates nearly half of its revenue from china. reports surfaced in china last month that chicken suppliers to the restaurants were feeding the birds a steady diet of hormones and antibiotics. yum brands said it was not quick enough to
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notify regulators about the drugs. sales at the fast food chains are expected to slip due to the negative pr. chinese officials have accused foxconn of accepting bribes. the manufacturer of consumer electronics for apple and other companies said this week that officials are investigating foxconn for allegedly accepting bribes from within its supply chain. foxconn said the company is working with chinese authorities and plans to carry out a review to avoid such issues in the future. the largest pension fund in the nation is selling off its shares in gun stocks. the california state teachers retirement system voted unanimously to divest from companies such as the freedom group that include the maker of bushmaster semiautomatic rifles. this is in response to the killing of 20 first graders and 6 adults at sandy hook elementry in newtown, connecticut, last month. gun manufacturers make up roughly $12 million in the teacher retirement portfolio. the lull that hit the motorcycle industry during the
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recession appears to be over. sales of the bikes rose in 2012 for the first time since 2006. bmw had a stellar year, with overall motorcycle sales rising 2%. studies suggest that more women and younger buyers are lured to head out on the highway. a decade ago, boomers outnumbered gen-x and gen-y riders four-to-one. gm is shifting away from outsourcing. according to reports, the automaker wants to rely more on its own employees for tech projects versus outsourcing jobs. and it will hire around 10,000 workers for tech centers in michigan, texas and georgia and one other yet- to-be-revealed location. meanwhile, general motors predicts a modest increase in u.s. market share this year, along with reducing its losses in europe. honda is also adding jobs in the u.s. and investing $23 million into an ohio plant where
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it will manufacture a new hybrid car. honda is hiring 50 people at the marysville, ohio, plant for production of the hybrid version of the honda accord. this will be the third hybrid model built by honda in america and the first in ohio. the vehicle goes on sale this fall. a car collector's dream is happening in arizona. classic cars will be auctioned in scottsdale starting sunday. just be prepared to see your money drive away. bids on collector's items such as ferraris from the '50s and '60s will be available. bids may go up to $10 million on some cars. nokia stock is turning heads on wall street. shares in nokia surged a surprising 18% yesterday after sales of its new lumia smartphone line passed expectations. nokia's ceo said the strong demand for the windows-backed phone means the company is on its way back to profitability. it shipped 4.4 million smartphones in the fourth quarter of last year. nokia's fourth-quarter earnings come out later this month.
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still to come, is amazon a hot stock in the making? that's up for debate later in traders unplugged. but first, a check-up on healthcare. how this year's flu season is dragging down business, plus, healthcare stocks that may get a bump from the affordable care act. that's next.
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a nasty side effect of this year's flu season comes at an expense to businesses. as the worst flu season in nearly a decade continues to spread, employers are warned of the high cost of the virus. the center for disease control is estimating that the flu will cost employers $10.4 billion in healthcare costs. john challenger of challenger, gray and christmas notes that workers are reluctant to call in sick, which is actually making the workplace more of a hot spot to pick up germs. "we've traditionally had a culture whether you were sick or not you just came in. but more and more, businesses are realizing that especially in the flu season, if people come in they may get a little bit of productivity out of that one worker, but if 10 or 15 more people catch the flu, they've actually lost an immense amount of work. " challenger suggests working from home and limiting your contact with other employees. whether you are for or against
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obamacare, investors who bought healthcare-related stocks last year are making healthy profits. here's one example: hospital chain tenet healthcare. the stock has gone from $17 to $33, up 61% during the past year. "there's another area that people can start getting into now, and that is hmos that specialize in medicaid. not medicare, but medicaid." among the names on arora's buy list: centene corp., molina healthcare and wellcare health plans. arora's fund made money last year, buying several healthcare stocks including hmo company amerigroup for around $22. the stock soared 315% to $91 and is being acquired by well point. a wake-up call for the makers of some popular sleeping pills. the fda is calling on ambien and zolpimist to lower the dosage in its sedatives. studies say the drugs pose a risk to drivers the morning after. drugs
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in the bloodstream were said to be at high enough levels to affect driving. the dosage for women will be cut in half. the fda says patients should consult a doctor before changing their intake. still ahead, does calm in the markets mean there is a storm ahead? that's next in traders unplugged.
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the band is back together. joining us now from the floor of cme group, traders unplugged
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orginals alan knuckman and jared levy. good to have you both back on the show. let's get it started with round one: 1) gold or goldman? which would you buy? > > i like them both. goldman has already had a 50% run-up in just six months, so i think it is a little rich. but the target is $200 a share. gold i think is undervalued here, long forgotten about. i think we could get a quick bounce up to $1,725 to $1,800. > > it is really a time horizon, and i think alan has a point when it comes to gold. he loves everything that goes back to commodities, but i think goldman is the one to watch here. we have got earnings coming out in a little bit. believe it or not, the analyst action in goldman is looking much better than a lot of the analyst action in gold. > > the financials are going to start getting some big payoffs i'm feeling this quarter. > > i would agree. > > they have led the way. but gold, let's not forget about it. it has disappointed a lot of people. that is when you want to look at it. > you're liking the stock of goldman. moving on: worry warts: the vix, the so-called fear gauge, had record trading volume last year, but dropped 35%-plus in price last week. should investors fear not? > > i think first of all, the
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vix, you need to look at it in context. i think a lot of people don't understand the vix - probably like my friend alan here. the vix, remember, measures - it is a complex algorithm between the front month and second month calls and puts in the s&p 500. > > the question is what are you afraid of? are you afraid of inflation? are you afraid of a new election? are you afraid of fires? > > i am afraid of fiscal cliff 2. > > are you afraid of the debt ceiling? what are you afraid of now? the market continues to march on regardless, and i am old-school. i look at bonds as an indicator of fear in the marketplace, and bonds sold off four points yesterday, and yields continue to climb on a sign of stability. > > i think the bottom line is, too, if you want to find fear, you are going to find it in individual stocks - not necessarily in the whole market and the vix. look at the puts skews if you are a little bit more of a savvy trader- > > we need individuals like you. > > that's right. > sounds like this market is bulletproof. moving on to round 3) dot com king?: amazon made all-new highs this week. is this the next apple? > > you are a bandwagon guy. what do you think? > > i would say no. it is at all-time forever highs. they really don't make money. and now you have target that is having price matching. > > here is something to think
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about. i actually agree with the guy for once. 3000 times trailing earnings is what amazon is trading for. their margins are this thin. you can barely see them. apple on the other hand, very low multiple, huge margins, and they are getting ready to roll out that cheap iphone, which you can afford. > > let's get back to target. everybody loves going to target. spend $200 minimum when you are in there. the p/e ratio on that is about 15 or so - 13. so, it is a good value. buy the july $55 call, which is almost all in the money, for about $5. we're trading at $60. i am looking for this to get to $70. those are the recent highs a couple years ago. so, target i think is a better play. amazon may continue to go up, but someday, it just doesn't make sense- > > sell the amazon, by the target. if you're fancy, you can call it "targé" for fun. > down to the bonus round: much to the happiness of investors, facebook topped $30 this week. true or false: 70% of facebook users live outside the u.s.? > > that is true. > > i would say that's false, but mr. social media would know
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that. he has got many names. look at the one with the mustache. > he is right. you are right jared. it is absolutely true. they are an international phenom. good to have you on the show, both of you. > > thanks angie. thanks guys. we'll be right back!
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tim biggam of trading block joins us on this friday for the short and the long on the banking sector. good to have you on the show. good morning. let's take a look at some of these banking stocks. are there any out there you would buy right now? > > really not angie, given more of the relative and big relative out-performance of the banking stocks, especially the big money-center banking stocks have had to compare to the overall market here. if you take a look at citigroup, bank of america, j.p. morgan, they all have been just flying forward here. going forward i think they probably got ahead of the game, so i am very cautious on the banks, certainly in comparison to the market, where i am a little bit cautious as well. > give us an example of a banking stock you would short. > > absolutely. citigroup is a
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prime example. taking a look at the chart there, it made a big, big move off that low $30s price point - nice consolidation there. but, the stock is up about 30% in just a couple of months here. this is a big money-center bank, so that would certainly be one name, given the fact that everyone has piled in. as we saw with apple, when everyone's kind of unanimous on one side of the trade, it is usually time to be a little fearful, because who is going to be the next buyer if it does start to drop. > speaking of which, i am hearing a lot of traders that are on the downside of the trade with wells fargo, which comes out with earnings today. you never know though. they could be wrong. > > absolutely. they could be wrong. wells fargo is another one that has certainly moved up in unison with the citigroups of the world here. the thing with banks, the loan-loss reserves, what they can manage to kind of smooth their numbers, it's a little bit difficult to drill down and see what they're actually making. but, the core business of most of these banks certainly is not robust,
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whether it is investment banking, mortgage lending and underwriting. so their kind of organic growth has stalled out here. given the fact that these things have run up so much and that interest rates have no room really to fall further, i think these things will be in tough sledding going forward. > thank you tim. tim biggam of trading block. > > you bet. thank you angie. that's our show for today. coming up next week, a former derivative trader from jpmorgan will be here spilling secrets about what really happens on the trading floor. from all of us at first business, thank you for watching, and have good weekend!

First Business
KICU January 11, 2013 4:00am-4:30am PST

News/Business. Angie Miles. (2013) New. (CC) (Stereo)

TOPIC FREQUENCY S&p 5, China 5, Honda 4, Nokia 4, Herbalife 4, Goldman 4, Starbucks 3, U.s. 3, Tully 2, Jim Bianco 2, Tim Biggam 2, Angie 2, North Korea 2, Ohio 2, America 2, Us 2, Eric Schmidt 1, Angela 1, Schmidt 1, Johnson 1
Network KICU
Duration 00:30:00
Rating G
Scanned in San Francisco, CA, USA
Source Comcast Cable
Tuner Channel 80 (561 MHz)
Video Codec mpeg2video
Audio Cocec ac3
Pixel width 704
Pixel height 480
Sponsor Internet Archive
Audio/Visual sound, color

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on 1/11/2013